South Korea Steel, Refining, Auto Shares Gain on Japan Quake

South Korean stocks gained, led by auto, steel, oil refining and technology companies, on speculation they will gain sales after an earthquake damaged plants of Japanese rivals, lowering output.

The Kospi Index advanced 0.8 percent to 1,971.23 at the 3 p.m. close. Hyundai Motor Co. (005380), South Korea’s biggest automaker, gained 1.6 percent after Toyota Motor Corp. said it will suspend production at all 12 of its factories in Japan. Posco (005490), South Korea’s biggest steelmaker, surged 8.3 percent after Sumitomo Metal Industries Ltd., Japan’s third largest, said it shut its Kashima plant after “big damage.” Shares of Korean insurers, transport companies and nuclear power-plant builders fell.

The 8.9-magnitude temblor, Japan’s strongest on record, unleashed a seven-meter-high tsunami that engulfed towns on the north coast on March 11. The death toll may exceed 10,000, according to Miyagi prefectural police department spokesman Go Sugawara. Damage will probably exceed the 20 trillion yen ($243 billion) sustained during the Kobe earthquake in 1995, Economic and Fiscal Policy Minister Kaoru Yosano said.

“Supply disruptions by Japanese companies seem inevitable, and demand for Korean-made products may increase,” analysts at Hyundai Securities Co. led by Lee Sang Won wrote in a report today. “We believe the earthquake will be slightly positive for Korean equities.”

Honda, Nissan

Honda Motor Co., Japan’s third-largest carmaker, said it will halt factories in Sayama, Mouka, Hamamatsu and Suzuka. Nissan Motor Co. (7201), the second-largest, said 2,300 new vehicles were damaged.

Oil refiner SK Innovation Co. (096770) rose 6.7 percent and S-Oil Corp. (010950) surged 13 percent as Japanese companies including JX Nippon Oil & Energy Corp. and Cosmo Oil Co. cut back capacity.

Supplies of petrochemical products including paraxylene, of which Japan exports about 2.5 million tons a year, will become tighter, benefiting South Korean producers, according to Hyundai Securities.

Samsung Electronics Co., the world’s largest maker of televisions and memory chips, climbed 4.4 percent, while LG Display Co., the world’s second-largest maker of flat-screen panels after Samsung, advanced 4.3 percent.

Hynix, Shilla

Hynix Semiconductors Inc. (000660), the world’s second-largest maker of memory chips, jumped 8.7 percent. Investors speculated the earthquake may cut production at Toshiba Corp. and boost chip prices, Meritz Securities Co. analyst Lee Sun Tae said in a report today.

Hotel Shilla Co. (008770), which also operates duty-free shops in South Korea, slumped 9.8 percent and Grand Korea Leisure Co., a casino operator, tumbled 15 percent on concern that there will be fewer Japanese travelers.

Histeel Co., a Korean producer of structural steel pipes and flexible stainless steel pipes, surged 15 percent.

“Japanese steelmakers say there hasn’t been significant damage but there will be fresh demand resulting from recovery work that will benefit Korean companies,” said Lee Jin Woo, a fund manager in Seoul at KTB Asset Management Co., which manages about $10 billion in assets.

Hyundai Marine & Fire Insurance Co. (001450) slumped 2.3 percent. Korean Reinsurance Co., which gained 0.9 percent after falling as much as 5.9 percent, reiterated that losses linked to the earthquake will probably be less than 5 billion won ($4.4 million).

Korean Air

Korean Air Lines Co., the nation’s biggest carrier, fell 7.3 percent while smaller Asiana Airlines Inc. (020560) dropped 10.6 percent. Both airlines resumed daily flights between South Korea and airports at Narita and Haneda in Tokyo on March 12. Hanjin Shipping Co. fell 5.4 percent.

Nuclear power plant builder Doosan Heavy Industries & Construction Co. (034020) tumbled 11 and Korea Electric Power Corp. sank 2.2 percent amid concern demand for nuclear energy will fall.

Workers battled to prevent a meltdown as a second hydrogen explosion rocked a Tokyo Electric Power Co. nuclear plant north of the Japanese capital. Asia’s largest utility is flooding two reactors at the plant with water and boric acid to avert a catastrophic release of radiation.

To contact the reporters on this story: Saeromi Shin in Seoul at sshin15@bloomberg.net; Jun Yang in Seoul at jyang180@bloomberg.net

To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net

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